Critical evaluation of power sector in India

Abstract

Power sector has been one of the most focused areas of Government from the point of view of growthto be maintained in economy. It has been acknowledged that there is a direct correlation between theconsumption of electric power and GDP growth in the economy..Indian Government has given impetus to the growth of power sector by setting targets to achieve interms of power capacity additions in five year plans. The 11th five year plan that ends on 31st March 2012had a targeted capacity addition of 78,700 MW to be made to the generation capacity of country.However, according to revised estimates of government, it is expected that we might fall short by10,000 MW in capacity addition..The ministry of power has set a goal of having power for all by 2012.This was envisioned to achieve a GDP growth of 8% per year.. However, the growth of power sector inIndia depends on lot of factors that include government regulations, availability of raw materials such ascoal for power generation, environmental factors, huge capital requirements and other socio- economicfactors.The growth in power sector in India has not been up to the mark to meet the desired policy initiatives.Considering the pace at which economy is developing, it is imperative that power sector also grows inproportion. These constraints in addition of new capacity in power sector, demand an efficientfunctioning of current players in power sector in India. Their performance becomes all the moreimportant, if the policy objectives of ‘Inclusive Growth’ have to be met..Earlier Indian power sector was dominated by public sector companies but in order to achieve power forall citizens government opened this sector for private companies during Electricty Act, 2003. This movenot only gave a thrust to capacity addition activities but also provided a competitive environment whichwould help in improving efficiency. Public companies are established, private companies have a lot ofpotential portfolio of power projects, government is striving to support them, all of these factors depicta potential growth story ahead for Indian Power Sector but still there are some issues like improperimplementation, project financing, regulatory issues, fuel availability and theft of electricity etc. whichare to be resolved to achieve desired growth of the country.